EigenLayer and Symbiotic are emerging innovations in the restaking space, each offering unique design choices and value propositions. However, with these advancements come inherent risks. At Chaos Labs, we help identify and monitor these different risks to ensure a safer and more resilient restaking ecosystem for all stakeholders in ether.fi. This analysis presents our understanding of these risks currently using publicly available material as of 2024/09/06.
Introduction
EigenLayer has been pioneering restaking by allowing staked ETH to secure other Ethereum-based applications. It currently offers three options: native restaking by directing validators’ withdrawal credentials to EigenLayer, LST staking, and EIGEN staking. Stakers delegate their entire stake to a node operator, who chooses which AVSs to secure based on incentives. In the future, EigenLayer plans to introduce Permissionless Token Strategies, allowing AVSs to accept any ERC-20 token as restaked assets. Currently, EigenLayer accepts the following tokens on the Ethereum mainnet:
Symbiotic offers restaking via a modular setup, enabling ecosystem participants to opt in and out of individually configured restaking arrangements. It gives decentralized networks, which Symbiotic refers to simply as “networks”, greater control over their restaking implementation in a permissionless manner. At the same time, Symbiotic plans to reduce risk through immutable contracts and a node operator reputation system. Additionally, the protocol plans to enable multi-asset staking across various blockchains, including ERC-20 and LP tokens:
Deposits and Stake Delegation
On EigenLayer, stakers can lock withdrawal credentials for natively staked ETH in an Eigenpod or send LST, EIGEN tokens and soon ERC-20s to a strategy contract. In all cases, they receive shares representing their stake, which can be delegated to a node operator. With Eigenlayer, stakers are required to delegate their entire restaked balance to only one operator. Operators use these shares to secure AVSs, opting in through the AVS middleware if they meet the AVS’ requirements. While EigenLayer initially vetted operators, registration is expected to be permissionless in the future. However, for specific AVSs an additional whitelisting process is required.
Source: Eigenlayer Blog
On Symbiotic, stakers deposit tokens into the default collateral contract and receive asset-specific collateral tokens, which they can send to different vaults, which have their own individual restaking setups. Each vault handles accounting, managing deposits, withdrawals, and delegation strategies, and determines reward distribution and slashing mechanisms. These vaults can be set up by individual operators or entities like Liquid Staking protocols and DAOs. Vaults can be deployed in an immutable, pre-configured way, mitigating potential governance risk, or specifying an owner that is able to update vault parameters.
By sending collateral tokens to a vault, stakers agree to its terms. Networks set their own criteria for accepted collateral, operator selection, and slashing conditions. They can then choose different vaults to provide for their security, setting a maximum stake limit for each vault. An operator can only receive stake from a vault for a specific network if they accept the criteria of both the vault and the network.
Source: Symbiotic documentation
Withdrawals and Redelegation
Redelegation and withdrawals on EigenLayer cannot be immediate, as AVSs may need time to penalize a misbehaving operator. Stakers can either undelegate voluntarily or face forced undelegation by the operator or an authorized third party. Once undelegated, shares enter a 7-day withdrawal queue for both native and LST stakers. During this period, shares do not contribute to restaking but remain at risk of slashing, if the operator misbehaves. Stakers must wait until the withdrawal period ends before redelegating to a new operator.
Similarly, on Symbiotic, when a staker requests a withdrawal from a vault, its stake is placed in a queue rather than processed immediately. The minimum waiting period is defined by each vault’s terms and can vary. Some vaults may also impose minimum withdrawal limits to reduce transaction costs. As with EigenLayer, collateral tokens in the withdrawal queue remain vulnerable to slashing and cannot be redelegated until the period ends. Unlike EigenLayer, Symbiotic stakers are not required to withdraw the full amount; they have the option to partially withdraw their stake from a vault.
Slashing and Arbitration
Slashing on EigenLayer has not yet been implemented, and the exact mechanics are still under active development. Each AVS sets its own rules and criteria for operator behavior and deploys its own smart contract to enforce slashing conditions. This contract interacts with EigenLayer’s core contracts to reduce the balance of the operator and indirectly of the staker on EigenLayer as needed. To prevent arbitrary or malicious slashing by AVSs, EigenLayer plans to introduce a slashing veto committee. This committee will be reputation-based and will have the authority to review and potentially overturn slashing decisions deemed unjustified.
On Symbiotic, networks define slashing conditions, but each vault can choose the slashing mechanism, opting between immediate or veto-based slashing. When a violation is detected, the network sends a slashing request to the vault. The vault’s slasher module processes the request. In veto-based slashing, a veto period begins, allowing a designated Resolver—either entities or smart contracts, as defined by the vault’s terms—to block or approve the slashing.
Risk Considerations
The table below highlights the risk comparison between EigenLayer and Symbiotic from the perspective of ether.fi Liquid Restaking Tokens.
| Eigenlayer | Symbiotic | |
|---|---|---|
| Deposits and Stake Delegation | • EigenLayer’s all-or-nothing model for delegating to node operators is less operationally accommodating as allocating restake amongst operators cannot be balanced as flexibly. • This lack of delegation flexibility can reduce competition among operators, potentially leading to lower rewards for stakers and higher fees for AVSs. | • Symbiotic’s support for a wide range of ERC-20 tokens in restaking needs to be carefully managed to restrict to accepting only safe assets. Allowing ERC-20 tokens to be restaked across multiple networks amplifies the risk of something going wrong with a delegated token. • Symbiotic’s modular approach helps isolate and diversify risk. Allowing stakers, node operators, and networks to opt into multiple vaults helps them mitigate the impact of a single vault’s vulnerability, enabling more effective risk management. • Each vault can have multiple operators, hence reducing the staker’s dependency on a single operator and reduce the risk of stake concentration around node operators. |
| Withdrawals and Redelegation | • During the withdrawal delay, funds are locked and can’t be used elsewhere, leading to opportunity costs for Stakers. This risk should be diligently managed in the LRT AVS allocation strategy. • Assets remain vulnerable to slashing if the operator misbehaves during the withdrawal queue, even after the withdrawal is initiated. Moreover, stake is subject to price changes while being in the withdrawal queue. • EigenLayer governance controls parameters associated with withdrawal periods, which could potentially introduce governance risk. | • The withdrawal period is determined by each vault, allowing stakers to choose the setup that best suits their needs, providing improved access to funds and reducing illiquidity. • Defined epochs for depositing and withdrawing stake help maintain consistent stake and ensures that networks have reliable security guarantees within each epoch. • During the withdrawal period, access to funds is delayed, leading to opportunity costs. Additionally, assets remain vulnerable to slashing and price change during this time. • Stakers can access a portion of their stake without fully exiting the vault, allowing them to manage their liquidity and risk exposure more effectively. |
| Slashing and Arbitration | • The lack of standardized slashing conditions across AVSs creates ambiguity for LRTs, operators and other stakeholders like end users. This makes it difficult for these stakeholders to assess and manage these risks in real time. • Operators and stakers face slashing and price risk during the dispute window in the arbitration period, without being compensated with staking yields. | • Symbiotic vaults have control over the slashing mechanism. LRTs can manage risk preferences associated with slashing mechanisms by switching vaults. • Vaults allow for network-specific staking within each vault, meaning that if a network faces a critical security issue, the impact is confined to the collateral delegated to that network within the vault. This structure minimizes cross-slashing risk, keeping the vault’s overall operations largely unaffected. • There is still unclarity about the assignment of resolvers. • Operators and stakers face slashing and price risk during the dispute window in the arbitration period, without being compensated with staking yields. |
Disclaimer
This analysis is based on a best-effort review of publicly available information as of 09/06/2024. Given the rapidly evolving nature of the sector, the relevance and accuracy of the analysis may change over time. We are not responsible or liable for any inaccuracies, omissions, or outdated information that may result from changes in the industry or new developments. Readers are advised to conduct their own research and seek professional advice as necessary.